This article presents an innovative institutional approach to supplement and ultimately strengthen the lagging United Nations Framework Convention on Climate Change (UNFCCC) process for negotiating a climate treaty that commits major emitting and developed countries to greenhouse gas emissions limitations. The Durban Platform for Enhanced Action does not aim to have such a treaty before 2020, and there remain very serious obstacles to reaching such an agreement even then. In the interim, the only international global climate regulation in force is a substantially weakened Kyoto Protocol. This creates the need and the opportunity for initiating smaller scale and less centralized forms of transnational cooperation for climate protection. This article articulates three distinct institutional strategies to create a variety of discrete, specialized regimes that will produce reductions in greenhouse gas emissions—a building block approach to climate protection.[1]

The different building block regimes articulated below would involve participation by a limited number of governments, subnational jurisdictions, firms, and nongovernment organizations (NGOs). They would coordinate and support specific transnational regulatory, research and development, and financial programs in discrete economic or development sectors or in geographic regions. To enlist participation, these regimes would primarily pursue nonclimate objectives that provide economic or other non-climate benefits to the regime members. At the same time, the regimes would be designed so that members’ activities would reduce greenhouse gas emissions. The approach provides incentives for actors to advance their respective interests in ways that would also produce a global public benefit.

The building block approach seeks to advance climate protection by focusing on multiple discrete regimes with a variety of objectives; by limiting the number of participants and at the same time including nonstate actors; by focusing on discrete types of activities that provide direct benefits to participants; and by using different modes of governance and representation of interests than those afforded by international law. Through these means, the building block approach reconceptualizes, enriches, and energizes the current global climate regime complex.[2]The approach consists of three basic institutional strategies for building transnational cooperation:

Club strategy: This strategy focuses on creating transnational regimes that produce economic or other nonclimate benefits either exclusively or primarily for the regime participants. These targeted nonclimate benefits include reduced energy costs, energy security, research and development, and competitive advantage. The structure of these regimes would be designed in accordance with the economic concept of clubs.[3]Clubs represent a class of cooperation game, based on generating club benefits that are limited entirely or primarily to those that participate in the club and abide by its terms. This type of cooperation game is wholly different from that involved in securing a climate treaty aimed at securing a global public good.[4]Like all public good cooperation games, broadly inclusive international treaties must deal with pervasive incentives to free ride on the efforts of others by either not joining a cooperative arrangement or not abiding by its terms. The club approach, by contrast, targets discrete benefits to club members, giving incentives to join. Clubs, however, must include mechanisms to monitor members’ compliance with the club’s rules and discipline those who fail to comply; in this respect they are different from pure "rules-of-the-road" coordination games.

Linkage strategy: This strategy leverages existing transnational organizations with missions other than climate protection. It does this by tapping the initiative of key, strategically situated organizational actors that support greenhouse gas (GHG) mitigation to launch new initiatives that further the organization’s basic mission while also achieving climate objectives. While there may not be institutional support for climate protection as such, there may be strategic pockets of support and functional alignment between the organization’s existing mission and initiatives that will achieve GHG reductions may enable policy entrepreneurs to link the two. Examples of this linkage strategy are the inclusion of rural renewable energy and low-GHG agriculture in existing bilateral and multilateral development programs or the extension of the Montreal Protocol to include currently unregulated ozone depleting substances (ODS) or ODS-substitutes that are GHGs. A somewhat different type of linkage is to build on existing institutionalized patterns of cooperation among an institution’s members to support new nonclimate activities that benefit members but also reduce GHG emissions. An example is the Association of Southeast Asian Nations (ASEAN) Agreement on Transboundary Haze Pollution.

Dominant market actor strategy: The third strategy reduces GHG emissions through the power of public authorities or private actors with a dominant position in specific global or regional market sectors that enable them to effectively set or at least strongly dominant influence the regulatory norms governing the sector. The exercise by governments of such power has been analyzed as the California effect (for example, California’s motor vehicle emission standards) or the Brussels effect (such as the European Union’s product regulations).[5]Where dominant public or private actors enjoy sufficient economic, strategic, or reputational gain from being a first mover in adopting regulatory or market standards, they may act unilaterally to induce others in the sector to follow suit (for example, the expansion of the European Union Aviation directive to foreign airlines). In appropriate contexts, dominant actors may have incentives to adopt measures that have the purpose or effect of reducing greenhouse gas emissions. A dominant private firm or small group of firms in a market for a given climate-beneficial technology, such a wind turbine nacelles or grid technologies, may adopt or promote adoption by governmental authorities of product and performance standards that would give the firm a competitive advantage. At the same time, these standards also would secure greenhouse gasreductions. Other firms may be obliged to follow because the leader’s dominant market position may enable it effectively to set market standards or to secure regulations that make its standard generally applicable.

In recent years, the torpor of the UNFCCC negotiation process has stimulated calls for more decentralized approaches to climate protection. The innovation of the building block approach consists in its three institutional templates for developing decentralized regimes and the logic that informs them. We recognize that there will be institutional and other challenges in developing successful building block regimes, but we believe the potential payoff will be significant and well worth the effort.

We also acknowledge the risk that a decentralized approach could, as some developing countries fear, divert energy from the UNFCCC process, and create an impression that bottom-up initiatives will solve the climate problem. Such a result could undermine and decrease the ambition for the international climate regime. The building blocks proposal, however, is intended to and can support the UNFCCC process. It can enhance the willingness and ability of countries to agree to binding international targets. It will do so in two ways: First the building blocks will reduce greenhouse gas emissions in the short term by capitalizing on the self-interested incentives of many diverse actors. This would help clarify and reduce the cost of setting greenhouse gas emissions caps, and it could change the views of important players regarding the cost of such reductions.[6]Second, the building blocks approach will build webs of transnational cooperation and trust that will foster international climate action. Both of these could promote the likelihood of negotiating an inclusive and effective climate treaty.[7]These contributions would be strengthened by arrangements, discussed in Part VI, for cooperative emissions monitoring, reporting, and other information-based arrangements among the individual building block regimes, and with the UNFCCC process. Although individually these regimes would make only moderate contributions to mitigation, the cumulative effect in reducing greenhouse gas emissions, building webs of transnationalcooperation on climate-related objectives, and catalyzing progress on a global mitigation treaty promises to be considerable.

This Article is organized as follows: Section II outlines the significant limitations of the UNFCCC approach to climate action. Section III presents the corresponding advantages of the building block approach. Sections IV to VI provide examples of regimes that have and could be developed to implement the club strategy, the linkage strategy, and the dominant market actor strategy. Section VII discusses the necessary components of transnational institutional regimes to facilitate, scale up, and coordinate the building block actions through concerted monitoring, reporting, and other information sharing arrangements. Section VIII concludes.